Engineering Services
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 46,000 engineering services firms in the US provide evaluation, investigation, planning, design, and development services related to utilities, structures, buildings, machines, equipment, processes, or systems. Specialty areas include civil, mechanical, industrial, electrical, electronics, computer hardware, aerospace, environmental, chemical, health and safety, materials, petroleum, nuclear, and biomedical engineering. Firms work on specific projects for clients and must be adept at project planning and management.
Dependence on Highly Skilled Personnel
Engineering service firms rely on a highly-educated, professional workforce.
Liability
Work site hazards and the complexity and scale of engineering projects expose engineering services firms to liability.
Industry size & Structure
A typical engineering services firm operates out of a single location, employs 25 workers and generates around $6.6 million in annual revenue.
- The engineering services industry consists of about 46,000 companies that employ over 1 million workers and generate $303 billion annually.
- Customer industries include general building, transportation, petroleum, power, hazardous waste, water, sewer/waste, industrial, and manufacturing.
- The engineering services industry is fragmented: The 50 largest firms account for only about 35% of industry revenue.
- Large companies include Fluor, Bechtel, and AECOM.
Industry Forecast
Engineering Services Industry Growth
Recent Developments
Mar 21, 2025 - Construction Backlog Declines
- The Associated Builders and Contractors (ABC) Construction Backlog Indicator fell 0.2 months to 8.4 months in February compared to a year earlier. February backlogs dropped 0.1 months from January. The commercial and institutional backlog increased by 0.5 months in February to 8.6 months over the same month a year earlier. However, February’s heavy industrial construction backlog fell 2 months to 7.2 months year-over-year, and the infrastructure backlog fell by 1.4 months to 8 months over the same period. The ABC’s Construction Confidence Index for sales was 64.5 in February, unchanged from January. A Confidence Index sales reading of 50 or more indicates that most contractors are optimistic about sales. ABC Chief Economist Anirban Basu said, “While many other economic sentiment readings have deteriorated in recent months, contractors remain optimistic that business conditions will improve through the first half of 2025.”
- Engineering News-Record’s Construction Industry Confidence Index increased six points to 61 in the first quarter of 2025 compared to the previous quarter. An index reading over 50 points to a growing construction market. Nearly two-thirds of executives surveyed in Q1 2025 said they believe the economy is stable. However, respondents said economics will decline in both 6-12 months from now and 12-18 months from now. In Q1 2025, subcontractors had the highest confidence reading of 66, followed by general contractors (61), and designers (53). More than a quarter of designers feel the economy will be slower 6-12 months from now compared to 11% for subcontractors and 14% for general contractors.
- Soon after taking office, President Trump issued an executive order called “Unleashing American Energy” that included an order to pause and review funding processes that some legal experts suggest will likely have ramifications for the Biden-era Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA), according to Construction Dive. Many stakeholders found the order's wording unclear, prompting the Office of Management and Budget to issue a memo limiting the funding pause to programs the original order termed as part of the “Green New Deal.” Even with the clarifying memo, experts suggest the order could stop obligated funding for infrastructure projects that are already underway. The order is expected to face legal challenges. At the end of 2024, about $294 billion in funding authorized under the IIJA remained unspent.
- North American construction and engineering spending in 2025 is expected to grow by 2% after increasing an estimated 6% in 2024, according to FMI’s first-quarter 2025 North American Engineering and Construction Outlook. With growth of 19%, the data center sub-sector will lead 2025 nonresidential building construction, followed by public safety (9%), amusement and recreation (7%), and manufacturing (6%). Commercial construction spending is expected to decline 9% in 2025 amid a 6% drop in warehouse demand, which accounts for more than half of annual commercial spending. Lodging construction spending is forecast to fall 7%, and stubbornly high office vacancies are expected to hold new office construction to 2% growth in 2025. Amid high mortgage interest rates and a lack of affordability, single-family construction spending is forecast to rise by 4% in 2025. A recent jump in new apartment supply and unfavorable cost conditions will reduce multifamily spending by 13% in 2025. Water projects will lead infrastructure spending growth in 2025 with a rise of 9%, followed by power (7%), sewage and waste disposal (6%), highway and street (3%), and conservation and development (1%).
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